Archive for the ‘Retirement’ Category
How to beat the system with an annuity
The answer unfortunately is quite simple – live to 116!
The Daily Telegraph worked out that if Jiroemon Kimura, the world’s oldest man who died at the age of 116 in June, had taken out an annuity when he retired, he would have got back £2.1 million from an inflation-linked annuity. However, he would have only paid £460,000 for the annuity.
That shows how well you do when you ‘beat the actuaries’ – but most of us won’t, or not by enough to match Mr Kimura. The actuaries now say someone aged 65 today will live to age 86. Too often we still meet people at retirement who refuse to concede that they will live that long in retirement. Failing to do so risks a real shortfall in income, spending power or both.
As the Daily Telegraph says, the new pattern for a lot of people is for a retirement pension to be topped up with part-time work. Like Mr Kimura, who went on helping on his son’s farm up to the age of 90.
For those that want to maximise their income and choices when they want to stop working we offer the 44 Financial Annuity Service. It’s like sat-nav for your retirement. We’ll guide you through the pensions maze and make sure you make the best decisions for your circumstances. Call us on 0116 380 0133 for an initial chat – at our expense.
Steve Clark
And the winner is–Inflation!
According to the Daily Mail, there now isn’t a single savings account in the UK that pays interest above the rate of inflation. 
With the inflation rate as measured by the Consumer Price Index up from 2.4% to 2.7%, the best easy-access account the Mail could find is an ISA paying 2.3%. Savers who are basic rate taxpayers would need to get 3.38% before tax to match the inflation rate while higher rate taxpayers would need 4.5%.
With the top non-ISA account paying 1.7% gross, a saver putting in £1,000 would see their spending power decline to £986 after 12 months even after banking their interest. But the cuts go on – National Savings & Investments announced it was cutting the rate payable on its own ISA from 2.25% to 1.75% in September.
These are tough times for savers, who need to consider alternatives to standard savings accounts if they need a higher income.
Steve Clark
May Inflation figures
The May inflation numbers from the Office for National Statistics (ONS) came in higher than expected, a reverse of last month’s better than expected data.
Annual CPI inflation for May 2013 was 2.7%, 0.3% up from April and back to the level at the start of the year. The index showed prices increased by 0.2% across the month, against 0.1% drop in corresponding period last year. Most forecasts had been for annual inflation to rise to 2.6%.
The RPI figure rose by 0.2% to 3.1%. Over the month the RPI increased by 0.2%, against no change a year ago.
Steve Clark
A higher pension–but at what price?
Former BT employees are the latest to get an offer from their former employer of a higher 
pension.
Similar offers have previously been made by Boots and ITV. Of course there’s a catch. The company is offering a higher fixed pension that will never increase in future, whereas its normal pension rises in line with inflation.
For those in good health, the danger of taking the fixed pension is that they live into their nineties and that the rate of inflation rises – in that case the spending power of their income will shrink. On the other hand, for those in poor health who aren’t likely to live long, a higher income now could represent a very good deal.
If you get such an offer, ask our advice, as there are often wrinkles (for example in relation to spouse’s pension rights) that could be very important.
Steve Clark
Self-Employed pension shortfall
The average employee gets £91,512 in employer contributions to their pension scheme during their working life, according to research by Prudential cited by the Daily Mail.
Self-employed people don’t get such contributions (though overall they do pay less National Insurance) and need to make up for the lack of them by saving more.
Though many self-employed (and employed) people say they can’t afford to save, most people find that once they’ve been saving for a few months, they no longer miss the cash they are saving. The gain is worth the pain!
If you are self-employed and would like to look at ways in which to save tax and save call us on 0116 380 0133.
Steve Clark